Grupo Elektra Announces Revenue Of Ps.31,385 Million And EBITDA Of Ps.5,435 Million In The First Quarter Of 2021

MEXICO CITY, April 28, 2021 /PRNewswire/ -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America's leading specialty retailer and financial services company, and the largest non-bank provider of cash advance services in the United States, today announced first quarter 2021 financial results.

First Quarter Results

Consolidated revenue grew 4%, to Ps.31,385 million in the period, compared to Ps.30,282 million in the same quarter of the previous year. Costs and operating expenses were Ps.25,951 million, from Ps.29,445 million in the same period of 2020.

As a result, EBITDA was Ps.5,435 million, compared to Ps.837 million a year ago. Operating income was Ps.3,493 million this quarter, from an operating loss of Ps.1,117 million in the same period of 2020.

The company reported net income of Ps.3,048 million, compared to net income of Ps.142 million a year ago.

Revenue

Consolidated revenue increased 4%, as a result of a 28% growth in commercial sales, partially offset by a 9% decrease in financial income.

The growth in sales of the commercial business — to Ps.13,383 million, from Ps.10,435 million a year ago — is largely the result of a solid increase in sales of Italika motorcycles — which boosts business productivity and the mobility of families — telephony — that strengthens the connectivity of an increasing number of users — and appliances, that are commercialized with optimal customer service, in the most competitive market conditions.

Sales from the commercial business were further boosted with the development of new stores under a format that offers an optimal mix of products and services, and allows the customer to maximize the purchase experience. Similarly, Omnichannel operations, with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices, from any device and at any time, further strengthened business performance.

The reduction in financial income — to Ps.18,002 million, from Ps.19,847 million in the previous year — reflects lower interest earned by Purpose Financial in the period, derived from the effects of the health contingency in the company's target market in the US.

Costs and Expenses

Consolidated costs for the quarter decreased 21%, to Ps.13,601 million, from Ps.17,233 million in the previous year. The lower costs are explained, to a large extent, by a 58% reduction in the financial cost, to Ps.4,359 million, from Ps.10,361 million the previous year, which largely reflects the creation of lower loan loss reserves this period.

As previously announced, a year ago an important creditor of Banco Azteca initiated a bankruptcy process (Chapter 11) in the United States, for which the institution decided, prudently, to reserve 100% of the credit of Ps.7,243 million, in the first quarter of 2020.

Commercial business costs grew 34%, to Ps.9,242 million, from Ps.6,872 million, in line with the increase in commercial revenue.

Selling, administrative and promotional expenses grew 1% to Ps.12,350 million as a result, mainly, of higher operating and advertising expenses, partially offset by lower personnel expenses.

EBITDA and net result

EBITDA was Ps.5,435 million, from Ps.837 million in the previous year. The company reported operating income of Ps.3,493 million, compared to an operating loss of Ps.1,117 million in the same quarter of 2020.

The main variations below EBITDA were the following:

A reduction of Ps.2,213 million in foreign exchange gains, due to the company's net asset monetary position in dollars, together with a lower depreciation of the peso this quarter compared to the previous year.

An increase of Ps.1,055 million in other financial results, which reflects a 4% gain this quarter in the market value of underlying assets of financial instruments held by the company — which does not imply cash flow — in comparison to a 1% gain a year ago.

Consistent with the results for the quarter, there was an increase of Ps.1,077 million in the provision for taxes in the period.

Grupo Elektra reported net income of Ps.3,048 million, from a net income of Ps.142 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, a pro forma exercise of the balance sheet of Grupo Elektra is presented, excluding the net assets of the financial business, whose investment is valued under the equity method, in this case.

This presentation shows the debt of the company without considering Banco Azteca's immediate and term deposits, which do not constitute debt with cost for Grupo Elektra. The pro forma balance sheet also does not include the bank's gross loan portfolio.

This proforma exercise provides greater clarity regarding the businesses that make up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.

Consistent with this, debt with cost was Ps.34,802 million as of March 31, 2021, compared to Ps.22,632 million in the previous year. The balance of cash and cash equivalents was Ps.17,230 million, from Ps.4,789 million from the previous year. As a result, net debt as of March 31, 2021 was Ps.17,572 million, compared to Ps.17,843 million a year ago.

As previously announced, during the quarter, Grupo Elektra's subsidiary, Nueva Elektra del Milenio, S.A. de C.V., as originator, placed through a special purpose vehicle established under Luxembourg law, Senior Notes for US$500 million, for seven years, at a 4.875% rate, in international markets.

The Senior Notes are used to fund reserve accounts for the payment of obligations under the Senior Notes and strengthen the liquidity of the company, which allows to further boost the financial soundness of Grupo Elektra.

As of March 31, 2021, the company's stockholders 'equity was Ps.97,118 million, and the stockholders' equity to total liabilities ratio was 1.2 times.

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America's consolidated gross portfolio as of March 31, 2021, grew 5%, to Ps.122,091 million, from Ps.116,381 million the previous year. The consolidated delinquency rate was 3.4% at the end of this period, compared to 10.9% the previous year.

The gross portfolio of Banco Azteca Mexico increased 11% to Ps.105,396 million, from Ps.95,361 million a year ago.

The Bank's delinquency rate at the end of the quarter was 3.4%, compared to 11.9% the previous year. The reduction is mainly derived from the credit of Ps.7,243 million that entered the past-due portfolio a year ago, and which at the time was fully reserved.

The average term of the credit portfolio for principal credit lines — consumer, personal loans, and Tarjeta Azteca — was 64 weeks at the end of the first quarter.

Grupo Elektra's consolidated deposits were Ps.189,105 million, 17% higher than the Ps.160,959 million a year ago. Deposits of Banco Azteca Mexico were Ps.190,614 million, 23% higher than the Ps.155,443 million a year ago.

The ratio of deposits to gross portfolio of Banco Azteca Mexico of 1.8 times, consolidates the solid growth prospects of the Bank, with optimal funding cost.

The Bank's liquidity coverage ratio — total of eligible liquid assets / total net cash out — was 626%, an outstanding figure in the Mexican banking sector.

The capitalization index of Banco Azteca Mexico was 14.25%.

Infrastructure

Grupo Elektra currently has 6,736 points of contact, compared to 7,238 units the previous year. The decrease results from the closure of 383 Purpose Financial contact points in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the company's operating efficiency — as well as the closure of 318 contact points in Latin America derived, to a large extent, from the sale of Banco Azteca del Peru in the previous quarter.

In Mexico, in the last twelve months, 32 new Elektra stores were opened in strategic locations, with a format that offers an optimal mix of products and services, and allows the customer to maximize the purchase experience.

The company has 4,960 storefronts in Mexico at the end of the quarter, 1,398 in the United States, and 378 in Central and South America. The important distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.

Company Profile:

Grupo Elektra is Latin America's leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States.  The group operates more than 6,600 points of contact in Mexico, the United States, Guatemala, Honduras, Panama and Peru.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating: economic value through market innovation and goods and services that improve standards of living; social value to improve community wellbeing; and environmental value by reducing the negative impact of its business activities. Created by Mexican entrepreneur Ricardo B. Salinas (www.ricardosalinas.com), Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. These companies include TV Azteca (www.TVazteca.com; www.irtvazteca.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Purpose Financial (havepurpose.com), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (irtotalplay.mx; www.totalplay.com.mx) and Totalplay Empresarial (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spains' Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Except for historical information, the matters discussed in this press release are concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect Grupo Elektra and its subsidiaries are presented in documents sent to the securities authorities.

SOURCE Grupo Elektra, S.A.B. de C.V.